1-Star Stocks Poised to Plunge: Groupon?

Market-lagging returns could be written in this 1-Star.

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, "daily deal" specialist Groupon(Nasdaq: GRPN) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Groupon's business and see what CAPS investors are saying about the stock right now.

Grouponfacts

Headquarters (founded)

Chicago (2008)

Market Cap

$6.8 billion

Industry

Internet retail

Trailing-12-Month Revenue

$1.9 billion

Management

Co-founder/Chairman Eric LefkofskyCo-founder/CEO Andrew Mason

Trailing-12-Month Return on Equity

(51.8%)

Cash/Debt

$1.2 billion / $0

Competitors

FacebookGoogleLivingSocial

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 90% of the 784 members who have rated Groupon believe the stock will underperform the S&P 500 going forward.

Just last month, one of those Fools, All-Star kurtdabear, succinctly summed up the bear case for our community:

The main thing [Groupon] has going for it is that it was first in its field. But it's in a "no moat" business that virtually anyone can copy, and larger more prosperous competitors are already hot on its heels (Amazon comes to mind). Since this race is a marathon, not a dash, I think [Groupon] will soon be passed by a pack of competitors. The intense competition will drive the profit out of the business model. With low/no profits a one-trick pony won't survive, and no one will want to acquire a business that can be started and run with a server and a couple of desktops.

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Want to see how well (or not so well) the stocks in this series are performing? Follow the newTrackPoisedToCAPS account.